Partner Article

CBI encouraged by SME borrowing figures.

The head Enterprise and Innovation at the CBI is encouraged by news that increasing numbers of SMEs are successfully applying for finance.

The SME Finance Monitor report for Q4 2011 showed that almost 80% of applicants for new or renewed overdraft facilities were successful, while 63% of all loan applications were positively received.

The past 12 months also saw a rise of ‘happy non-seekers’ - SMEs who have neither wanted nor needed to apply for finance. 78% of SMEs fell into this category, up from 68% in Q1-2 2011. However, the proportions of those who wanted finance but felt unable to apply remained stable at 12%.

Dr Tim Bradshaw, the head of Enterprise and Innovation at the CBI believes that the survey indicates that the lack of demand from SMEs for bank finance is driven by recent economic uncertainty in the Eurozone.

He commented: “It’s encouraging news that the majority of smaller and medium-sized companies who applied for an overdraft facility in 2011 succeeded in securing this finance.

“Slightly fewer SMEs, around two-thirds, secured loans, but the data indicates that this number has begun to improve in more recent months.”

“With growing headwinds facing banks, the Breedon review into alternative sources of finance will be critical to ensure there is a diverse supply of financing options available to firms when the economic recovery takes off.

“The review must identify and remove barriers to non-bank lending, making it easier for companies to locate a form of funding that’s right for them.”

Research also showed that 14% of all SMEs plan to apply for finance in the next 3 months, while a fifth of those with employees are likely to seek external funding.

Comparing the last quarter of 2011 with Q3, more than half of those SMEs that would like to apply for an overdraft or loan in the future cite the economy as the reason they are unlikely to do so, an increase of nine percentage points over three months.

This was posted in Bdaily's Members' News section by Ruth Mitchell .